Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
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Special
Announcement- Weekend Previously Announced Trading Alert Canceled |
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As previously announced, we had planned
on issuing a Trading
Alert this weekend on a medical technology company that is on the verge
of a major commercial roll out of a new, FDA Approved, patented device
which we expect to be sold to hospitals and clinics world wide.
For those of you who follow our Trading
Alerts, you know they are always predicated on a major corporate news
event. The company releases the information publicly after the market closes,
allowing investors to learn this valuable information long before the market
next opens. This levels the playing field for individual investors.
Our target company was unable to
deliver the goods for today's alert, so we will delay until they are in
a position to give our members the first look at an exciting corporate
event.
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Will The Market
Ever Pay Up For Growth Again? |
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This past week the Conference
Board, well known follower of investor sentiment, announced that investor
confidence is at the lowest level since the Conference Board was
formed in 1916.
Consider that statement- confidence
in the market is now lower than it was after the 1929 crash, the Great
Depression, World War II, the Korean War, the Viet Nam War, the rampant
inflation of the 1970's during the Carter Administration, and the '87 crash.
Short Sellers have replaced technology
company CEO's as the Rock Stars of Wall Street. Hedge Fund managers are
routinely publishing lengthy reports, challenging every aspect of the businesses
of the companies they are targeting. They are riding the fear momentum
wave flawlessly, using the daily flow of news to enhance the climate of
fear and spook investors into selling shares of stock.
Martha Stewart (NYSE: MSO) was
the big news of the week. The Wall Street media blanketed information about
her sale of just under 4000 shares of Imclone prior to the prolific drop
in the stock on bad news from the FDA with a National Enquirer type fervor.
Naturally, Martha Stewart's stock dropped 20% on the news.
Do you imagine that any Martha Stewart
groupie cares in the slightest bit how or why she sold her 4000 shares
of Immclone when their shopping for the latest table cloth? Would she put
her entire company at risk over the chump change associated with one trade?
Do you really believe her Merrill Lynch broker was speaking to the media
about the issue? Do you think anyone will even remember this incident two
years from now, or that her company's sales will drop even $.01 from this
news? NO- not likely. So why should her stock drop 20% in one day?
Yes, this is the emotionally driven
climate of fear we are living in. This is the contrarian's dream environment.
This market is as excessive to the downside as it was to the upside in
March of 2000.
In London during the year 1760, 150
brokers were kicked out of the Royal Exchange for rowdiness. They moved
to a place called Jonathan's Coffee House for a location to buy and sell
shares of stock. This eventually became the London Stock Exchange.
Since the first shares were exchanged
in 1760 we have been in a long term Bull Market. Stock buyers have made
enormous fortunes investing in exciting growth companies, and they come
along all the time. It is estimated there are approximately 50 families
in Omaha who are worth over $1 billion because they invested $50,000 to
$100,000 in Warren Buffet's Berkshire Hathaway in the 1960's, and never
sold.
The market will pay up for growth,
and it has always been willing to. In fact, the market is willing to pay
up for growth right now despite what the media would have you believe.
Take, for example, the home building
industry. People are taking all their additional resources and investing
in new homes, as opposed to the stock market which was the preferred investment
vehicle of the 90"s.
The chart alongside compares the
performance of the NASDAQ against the performance of the Home Builder's
index since November of 2001. As you can easily see, the Home Builders
index has appreciated about 66% since late 2001. Over the same time frame
the technology heavy NASDAQ has dropped 30%. Business is great for home
builders, and the market is willing to pay up for the stocks in that group.
If you think it is impossible to
make money in the market in today's climate of fear, just glance at the
performance of the Home Builders Index this year, and imagine you had some
money there. Now, fast forward to a time when the main stream media tells
you it's ok to buy stocks again. To a time when they are talking about
the 30% increase in the price of Martha Stewart shares, instead of the
rumors about her stock sales in another company. These days will come back.
Probably later this year. Here are some comments on two of the stocks we
have been featuring recently.
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XMLG
Global (OTC BB: XMLG)- Rebound Adequate and Volume Impressive |
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Volume was enormous Thursday on the
heels of Wednesday evening's announcement of the outstanding contract the
company inked this past week. Click
Here to read our edition covering the event. The stock more than doubled
in early trading, and settled back into the $.20 range for a solid 30%
plus gain in one day. Volume was even more exciting with over 5 million
shares trading that day, the highest volume day in the stock's history.
We were a little disappointed the
stock did not close higher. There seemed to be a few large blocks for sale,
and there was probably some profit taking by investors who bottom fished
in the last few weeks.
Stand by for more positive fundamental
developments out of this company. Sales are just beginning to ramp up after
18 months of the worst market imaginable for their software, and Wednesday's
evenings news release could prove to the first of many to come. Considering
the current market conditions, it's not surprising to see the stock pull
back from Thursday's intra day high.
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Diomed
Holdings Inc (AMEX: DIO) Becomes DioDeath in the Short Run |
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In our June
8th edition we suggested Diomed might have finally found a bottom
at about $2.80, and we were dead wrong. The stock rebounded for
a day or two, and then continued its relentless march south to the $2 level,
where it may have finally found a bottom.
The Biotech index has been under
severe pressure for the past three months, but Diomed has really
been clobbered. This is particularly puzzling when you consider there has
been no news, either positive or negative, on this company's commercial
roll out of its revolutionary new EVLT treatment for varicose veins.
From today's levels you are joined
in losses by some very high profile investors if there is any further erosion
in value. Just prior to going public, Diomed completed a $10
million private placement at $2 per share. Investors included the
high profile Bronfman Family of Seagrams (250,000 shares),
world famous attorney Alan Dershowitz (75,000 shares with his wife),
and Wall Street Guru Jack Rivkin (230,000 shares), now retired,
but former executive vice president in charge of investments at Citigrup.
The names of these investors are
disclosed in the recently filed registration statement by Diomed.
Currently, their shares of restricted from being sold in the public market
until this registration statement is declared effective by the SEC.
It is absurd to see the stock so
low with no negative news out of the company.. We won't even see hard numbers
on the EVLT roll out out until June quarterly results are released.
We hear sales are robust and investors
will be favorably impressed over the next two to three quarters. For the
time being allow the news and numbers to unfold. This investment is in
its infancy, and later this year the stock could regain its composure and
head back up to its old highs and higher. Patience is your strongest ally
in the case of Diomed.
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